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Oil rises back above $64, OPEC sees ample supply

LONDON - Oil rose back above $64 a barrel on Monday after OPEC spurned calls for members to pump more crude and said supply looked sufficient despite concerns over low US gasoline stocks.

US crude for May delivery rose 48 cents to $64.11 a barrel by 1055 GMT after slipping 22 cents on Friday. London Brent crude, which hit a 2007 high on Friday, stood 48 cents higher at $69.11.

‘In contrast to the current tightness in the gasoline market, global crude oil fundamentals appear to be largely in balance,’ the Organization of the Petroleum Exporting Countries said in its April monthly oil market report.

‘Given ample crude supplies, it is clear that increasing production would only serve to build crude oil inventories and would not resolve the tightness in the downstream.’

The International Energy Agency, adviser to 26 industrialised countries, warned last week that oil stocks could fall further if OPEC kept output at current levels. OPEC members have agreed cuts totalling 1.7 million barrels per day since last October.

A rise of as much as 5 percent in crude prices over the past week has been driven by unexpectedly low stocks of gasoline in the United States ahead of the peak summer driving season.

US gasoline futures had fallen 0.26 percent by 1053 GMT, extending a loss of 0.55 percent on Friday. But prices are still up 40 percent since mid-February because of strong demand growth and refinery hiccups that have cut stock levels by 12 percent.

‘Until gasoline stocks recover, that’s going to be the dominant thing in the market,’ said Helen Henton of Standard Chartered.

Bad weather

An unusual late-season blast of frigid weather in the US Northeast, a voracious consumer of winter heating oil, could add to price support. Icy rain and gale-force winds hit the region on Sunday, with rare April snow expected.

Gasoline’s strength contrasts with relative weakness in the US crude oil market, weighed down by swollen stockpiles in the Cushing, Oklahoma, delivery point for the contract.

US crude hit a record discount of nearly $7 versus Brent last week and the gap was still around $5 on Monday.

Late on Friday, Valero Energy Corp. said it was restarting its McKee refinery, whose outage since February was a leading cause of the build-up in Cushing, but traders said other planned refinery turnarounds in the area may keep stocks high.

Oil traders are also keeping a close eye on Nigeria, the world’s eighth-largest exporter, for fear that violence around elections could further disrupts oil output, which has been cut by one-fifth for more than a year.

Opposition parties burned buildings, blocked roads and barricaded election offices after flawed state polls at the weekend -- a precursor to the April 21 presidential vote that is to be the first handover from one elected leader to another.

Nigerian newspapers estimated 50 people were killed in the violence at the weekend. Oil flows were not disrupted.

‘It seems that things maybe aren’t as bad as we thought they might be,’ said Tony Nunan of Mitsubishi Corp. ‘But the big thing is the presidential election. The question will be whether the new president has full support.’